Have you ever applied for a credit card, home loan or personal loan only to be knocked back due to a bad credit rating?
It is more common than you think, with nearly 14% of all Australians listing a ‘default’ or ‘red flag’ on their credit file. These defaults and red flags are sometimes quite serious, whether it be from missing a mortgage repayment repeatedly all the way to less serious offences such as forgetting to pay a phone bill while you were traveling for 6 months.
This article looks to cover what your credit file is, how to check your credit file for FREE and provide information about how serious it is to maintain your credit rating for the future.
What is a credit file and why does it exist?
A credit file is quite simply a document listing all of your active credit usage in Australia. This means that every credit card, loan, debt and more is listed on this file. It is used by companies and banks to centrally manage whether or not they should lend you money and the factor of risk you may present to them. Will you not repay your debt? Are you a liability? These are all questions people are asking when checking your credit file.
Banks are obviously less interested in lending money to people who have a bad credit rating. In turn they check up on your past, hoping to reassure their decision to lend or not to lend you money.
How can I check my credit rating or credit file?
There are numerous credit checking companies in Australia. Many want you to pay money to access the content, though by law your credit file is able to be viewed for free at your request. In saying this, some companies make it quite hard to check your credit rating without paying admin fees.
We know better though!
Try visiting the Veda Advantage run website, My Credit File. View ‘what they offer’ and you will see a free option for receiving your credit file. Please remember though that companies and banks all use multiple providers, so whatever you find on this credit file check should be proof checked against some other providers (who also offer free reports on credit checks).
Why is it so important to maintain a good credit rating?
Many readers have written in to Savings Guide quite distressed. They were once young, foolish and had a non caring attitude towards lines of credit. This has come to bite them in the bum big time.
Scenarios range from:
- People traveling overseas for 6 months, not paying their phone bill, coming back to have debt collectors on the door and a BIG dent in their credit rating.
- People who have missed multiple payments on their mortgage.
- People who have over spent on credit cards and have been unable to repay.
These readers have all likely moved on, grown up, started a family and perhaps decide to try and buy a house. When it comes to applying for the loans, guess what? The credit check brings them up as a huge liability that should not be lent to.
Don’t let irresponsibility with credit ruin your chances into the future.
I want to repair my credit rating, what can I do?
Ok well there is no point living in the past. Get off your couch and figure out how to attack this issue on your credit rating.
Firstly you should look to contact any providers on the list and ensure you are 100% debt free with them. Pay down those missing phone bills, late video rentals, the lot.
If you feel that there is something on your file that is not your fault, not yours or perhaps an error of judgment – you can actually contest it with the powers that be. Fill in a ‘file update’ form available from your credit checking agency and prove to them the error.
Did you know this about your credit rating?
Every time you apply for a credit card, regardless of whether you end up opening it, the bank lodges a note on your record showing that they checked into you. This can be bad if you apply for a lot of credit cards, perhaps if you have a big balance transfer you wish to move across and all of the banks reject you. Other lenders will see these rejections and your desire to apply for extra credit. Just remember, anything you do with credit – will show on this record! Be careful readers!